The Reserve Bank of India has constituted an inter-departmental group to study and provide guidance on feasibility to introduce fiat digital currency backed by it. It will be submitted by end-June 2018. Fiat currency is the currency that a government has declared to be legal tender. It is different from cryptocurrency or virtual currency like Bitcoin which is not legal tender and not backed by the government. Fiat Digital Currency is the digital form of fiat money which is currently established as money by government regulation or law. As opposed to private digital tokens, fiat digital currency will be issued by the central bank. Fiat Digital currency will constitute the liability of central bank and will be in circulation in addition to widely used paper and metallic currency. They will be based on blockchain technology which is the backbone of unregulated virtual currencies like bitcoin. Blockchain technology behind it has potential benefits for financial inclusion and enhancing the efficiency of the financial system.